Milken Institute's New Economy Index

Which states are in the best position to take advantage of the opportunities for growth in the New Economy? The New Economy Index from the Milken Institute attempts to answer that question.

"Our index measures a state's likelihood of success in the New Economy," said Russ DeVol, who studies technology's impact on the U.S. and regional economies. "It measures the New Economy's critical attributes, which are based on innovation, knowledge, and the ability to convert ideas into viable products and services."

The Index ranks each state based upon 12 criteria critical to future high-tech growth. The 12 criteria include research and development dollars, the population's percentage of advanced degrees, number of patents issued, venture capital investment, business starts and proceeds from IPOs (Initial Public Offerings of stock) -- all indicators of future high-tech growth.

According to the index the states most likely to do well in the high tech economy are Massachusetts, California, Connecticut, Colorado and Washington.

The least ready states are Arkansas, West Virginia, South Dakota, Mississippi and Kentucky.

The major reason Arkansas ranked last in the index is that it ranked last in education.

According to DeVol, Massachusetts is number one on the New Economy Index because of its vast research capabilities, its highly educated population, and its many venture capital investments. California does well on exports, patents issued, venture capital investment, business starts and IPO proceeds.

Source: Antonio A. Prado, "New Economy Takes Center Stage, but Not All States Are Well Prepared," Investor's Business Daily, October 27, 2000; Press Release, "Massachusetts, California, Connecticut In Best Position To Excel In New Economy, Milken Institute Survey Finds," October 18, 2000, Milken Institute.